UBS raises gold price target: may rise to $3,800 by year-end, ETF holdings near historical record

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UBS Group has significantly raised its gold price forecast, believing that, driven by expectations of Fed easing, a weakening US dollar, and geopolitical risks, the gold bull market is far from over.

UBS has raised its gold price target for the end of 2025 by $300 from the previous level, to $3,800 per ounce. At the same time, the bank has also increased its mid-2026 gold price forecast by $200, to $3,900 per ounce.

Recently, the gold market has shown strong upward momentum, setting a new all-time high of $3,673.95 per ounce this Tuesday, with a cumulative increase of more than 39% this year. As of press time, spot gold was up 0.3% to $3,644 per ounce.

UBS analysis shows that investment demand for gold is heating up rapidly. The bank predicts that by the end of 2025, the total holdings of gold Exchange Traded Funds (ETFs) will exceed 3,900 tons, approaching the all-time high of 3,915 tons set in October 2020.

Easing Expectations and Geopolitics Are Major Drivers; Institutional and Central Bank Demand Remains Strong

UBS states that the core logic for its bullish outlook on gold lies in its judgment on the future macro environment. The bank expects that the Federal Reserve will enter an interest rate cutting cycle, which will directly lead to a weaker US dollar, thereby enhancing the attractiveness of gold priced in dollars.

The report believes that geopolitical risks and policy divergences between the US government and the Fed are key factors boosting gold’s safe-haven value. In addition, the report specifically mentions President Trump’s preference for lower interest rates, noting that this would also support gold prices. Traditionally, gold performs well in low interest rate environments.

Meanwhile, the global central bank gold buying spree is expected to continue. UBS expects that this year, global central bank gold purchases will remain at a strong level of 900 to 950 tons, slightly below last year’s near-record level of just over 1,000 tons, but still showing countries’ confidence in gold as a reserve asset.

Despite the optimistic outlook, UBS also pointed out the main downside risks facing gold. In the report, UBS adds:

“The key risk facing gold is that if inflation data unexpectedly rises, the Fed could be forced to raise interest rates.”

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